- The deputy governor of the People’s Bank of China stated that Bitcoin and cryptocurrencies are investment tools.
- China will issue new regulations in the future as stablecoins are gaining traction as payment solutions.
- VeChain and NEO prices soar as the recent announcement was made.
Stricter regulations will arise as stablecoins gain traction
Li Bo, the deputy governor of the Chinese central bank, spoke at the Boao Forum regarding the regulatory issues around Bitcoin, and other cryptocurrencies, including stablecoins.
The deputy governor further stated that Bitcoin is an alternative investment asset and not a currency in itself. The main role that cryptocurrencies should play in the future is as an investment tool or alternative asset, he said. Li stated:
Since it is used as an investment tool, many countries, including China, are studying what kind of regulatory environment should be applied to this investment method, and to ensure that speculation in such assets will not cause serious financial risks.
The use of stablecoins as payment solutions could quickly gain traction; however, Li emphasized that even stricter regulations are needed than the rules currently in place for Bitcoin. For stablecoins that are issued by private companies, Li said that they must be subject to “strict supervision like banks or quasi-bank financial institutions.”
China is well-known as a non-crypto-friendly country as it does not consider cryptocurrencies as legal tender. The Asian country imposed a blanket ban on all initial coin offerings (ICO) and shut down crypto exchanges. However, in mid-2019, the world’s second-largest economy declared Bitcoin as virtual property with value.
Chinese tech giant Meitu also raked in $100 million in Bitcoin and Ether as part of the firm’s treasury allocation plan. The Xiamen-headquartered tech firm further believes that cryptocurrencies are better stores of value than fiat.
The central bank, the People’s Bank of China, further clarified that owning Bitcoin in the country is legal. Mining operations are also legal, as China accounts for around 65% of all Bitcoin mining globally. A recent electrical grid blackout in the Xinjiang province led to a decline in Bitcoin’s hash rate.
Before new regulatory measures are introduced, current measures and practices will be maintained.
VeChain and NEO prices soar with China’s announcement
While the rest of the crypto market is just waking up from the massive price crash this weekend, VeChain and NEO have witnessed staggering price surge – gaining 40% and 65%, respectively, in the past 24 hours.
VeChain price currently sits at $0.27, and NEO price climbed to $123.33 in the early Asian trading hours on April 19.
The Chinese-based NEO and VeChain cryptos witnessed similar price growth, outpacing other digital assets when China’s President Xi Jinping announced several blockchain initiatives in the country.
The crypto market was sent into a meteoric bullish rally, especially the cryptocurrencies with strong links to China. NEO gained over 70% when Xi announced the country’s push for blockchain, while VeChain surged by over 110% in the following two weeks. In contrast, the rest of the cryptocurrency market gained an average of 17% over the same period.